BALANCING AN ACCOUNT
The difference between the two sides of an account is its balance. The balance is written on the lesser side to make the two sides equal. This process of equalising the two sides of an account is known as Balancing.
The rules for balancing an account are stated below:
1. Add up the amount columns of both the sides of an account and written the totals in a separate slip of paper.
2. Find out the difference of the two totals.
3.Write down the difference on the leaser side of the account.
4.now total up the both sides and write the totals and draw double lines under them.
5. Again write the difference on the opposite sides below the double lines.
Debit Balance:
If the debit side of an account is heavier, its balance is known as Debit Balance.
Credit Balance:
If credit side is heavier, its balance is known as Credit Balance.
Zero Balance:
If the two sides of an account are equal, that account will show Zero Balance.
The rules for determining the balance are as follow:
Total Debit = more than total credit = Debit balance
Total credit = more than total debit = Credit balance
Total Debit = Total credit = Nil balance
It may be noted that at the time of balancing an account debit balance is placed on the credit side and credit balance on the debit side. this balance is known as Closing Balance and when next year will start, it will be the opening balance. in other words, What is closing balance in this year, is the opening balance of the year.
NORMAL BALANCES
The normal balance of various accounts are illustrated below:
Accounts of assets normally have Debit balance.
Accounts of expenses normally have Debit balance.
Accounts of revenue normally have Credit balance.
Accounts of liabilities normally have Credit balance.
Accounts of owner normally have Credit balance
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